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2014-2015 Corporate Social Responsibility Report

Ethics and compliance

We know that establishing trust requires holding ourselves to high standards. Our principles have remained constant since the company’s founding in 1961: dedication to ethical practices; pursuit of excellence; and belief in the power to make a difference for our associates, members, customers, and communities.

Humana’s ethics and compliance programs provide guidance and monitoring for our business. We utilize tools for oversight. Doing so helps us meet legal and regulatory requirements, as well as our internal ethical standards.

We rely on our compliance team to:

  • Provide practical guidance for complying with legal and regulatory requirements
  • Monitor and develop proactive controls around compliance
  • Manage Humana’s relationships with regulatory agencies

We also inspire a culture of compliance and instill a sense of accountability among our associates. We integrate ethics and compliance into our culture by:

  • Applying our code of conduct (Ethics Every Day)
  • Requiring annual completion of Ethics and Compliance Training
  • Instituting organizational policies, procedures and guidelines (housed in an extensive online policy library) to support our code of conduct
  • Maintaining systems for addressing questions, concerns and alleged violations of Humana policies

Subject matter experts and leaders from across the company worked together to develop our code of conduct. Every year, we update the code of conduct, and related ethics and compliance training, to reflect new laws, regulations and policies. We also monitor how well we’re doing by conducting internal assessments; asking external consultants to compare our efforts to industry best practices; managing our external relationships; and seeking out the best guidance on compliance regulations. Our Corporate Compliance Committee, which is composed of Humana’s full executive team, compliance officers, the Chief Audit Officer and other senior leaders, provides regular reports to our CEO and the Audit Committee of the Board of Directors through the committee chair, the Chief Compliance Officer. Our internal accounting controls and procedures allow us to report accurate and reliable financial data to the Securities and Exchange Commission (SEC), state insurance departments and other state and federal regulatory agencies.

The Compliance and Ethics Leadership Council (CELC) 2014 State of the Function analysis survey benchmarked more than 300 companies representing 20 industries with company revenues ranging from under $1 billion to more than $100 billion. According to the survey:

  • Humana maintains approximately the same number of compliance and ethics full-time associates in the headquarters location per 1,000 company employees, compared to the healthcare and insurance industry’s median.
  • Humana’s compliance & ethics program budget for 2014 was in line with the healthcare and insurance industry’s median budget.
  • Humana tracks 20 metrics and reports 20 to the Board, which is greater than the healthcare and insurance industry average of 18 metrics tracked and 14 metrics reported to the Board of Directors.

During 2014 and 2015, our compliance team focused on fulfilling federal and state regulations, including those that came out of the Affordable Care Act of 2010 (ACA). The ACA fundamentally changed the healthcare marketplace — legal requirements and customer expectations — requiring us to address the quality and affordability of our health insurance products in new and specific ways. Our compliance team dedicated significant time and resources in the building of process and compliance infrastructure for the ACA mandates, as well as for Medicaid expansion, dual-eligible demonstration projects, state exchanges and the integrated care delivery strategy.

We are committed to marketing communications and activities that comply with all laws and regulations. To facilitate compliance with regulations, Humana leaders from all business units and locations meet regularly to review marketing plans and product and services offerings.

A 2015 Centers for Medicare and Medicaid Services (CMS) audit identified issues related to Humana’s administration of our Medicare plans. We have already taken action to correct the issues, and CMS has reviewed and accepted Humana’s corrective action plans in response to the findings. Among other steps, we have put in place additional, comprehensive staff training; new reporting, tracking and verification procedures; technology upgrades; and member outreach campaigns. Humana will continue to hold ourselves to the highest standards, and we intend to use this opportunity to continue to further dedicate ourselves to serving our members as a true health partner.

We have also focused our compliance efforts on the broad range of federal and state laws that govern our government contract work. We work with both the federal government and state governments, which means we must comply with the U.S. Foreign Corrupt Practices Act, the Procurement Integrity Act, and other laws related to government contracting. Humana’s Government Business team conducts internal audits and also uses external audit resources to make sure we’re complying with these laws. The team also has a program — called the Exemplar — that recognizes associates who have gone “above and beyond” the basic requirements to help maintain our ethics and compliance programs.

Fraud, sales and marketing are the top compliance risks for us. Into 2016, we will pay close attention to these areas, while continuing our primary areas of compliance focus from prior years. We will also strive to keep our program current and comprehensive, covering all aspects of Humana’s presence in the marketplace.

Grievance hotlines and issues management

Humana has many resources and safeguards in place to address the risks associated with operating our business. This collection of initiatives safeguards against corruption, as well as ethics and compliance violations. They are also designed to keep our members’ data secure and private.

  • Ethics Help Line
    Humana’s 24-hour Ethics Help Line serves as a resource for associates who become aware of a potential violation. Among other things, the help line can provide clarification about or be used to report a suspected violation of a Humana policy or a federal, state or local law or regulation. Trained, non-Humana associates receive all calls, and callers can remain anonymous. Associates can also report a concern (anonymously, if desired) by using the Ethics Help Line web reporting site at ethicshelpline.com.
  • Anti-corruption policy & committee
    We conduct our business in accordance with the Foreign Corrupt Practices Act (FCPA) of 1977 and all amendments implemented since its inception, and any other anti-bribery or related laws of countries where Humana is doing business. Humana’s Anti-corruption Committee has general oversight responsibility for Humana’s anti-corruption program and monitors compliance with the anti-corruption policy.
  • Privacy Office
    The role of the Privacy Office is to safeguard protected information while ensuring it is available to those who need and have a right to know. Humana’s strategy and actions are consistent with federal and state laws, rules and regulations. In addition, we oversee activities related to the development, implementation, maintenance of, and compliance with Humana’s privacy policies and procedures that support the safeguarding of protected information. This includes responsibility for enforcing policies and practices that help balance the business with consumer privacy interests, as well as conducting formal breach notifications whenever breach incidents result in actual or likely exposures of information. During the two-year reporting period, Humana received 92 privacy-related complaints from our vast stakeholder population (e.g., associates, members, providers.). In 2014 and 2015, Humana received 38 and 54 substantiated complaints concerning breaches of customer privacy, respectively.
  • Complaint hotlines
    Humana maintains several points of intake for allegations including — but not limited to — fraud, ethics violations, associate misconduct, and compliance violations. Examples of these points of intake include the Ethics Help Line and email; our human resources HR4U hotline and email; Special Investigations Unit referral line and email; and the Board of Directors hotline.
  • Enterprise Investigations Consortium
    The Enterprise Investigations Consortium (EIC) facilitates collaboration among groups that perform an investigative function throughout the company and manage potential allegations of corruption in all of its forms. The EIC is composed of 10 investigative groups and nine support groups that conduct investigations that involve, but are not limited to: fraud; waste; abuse; criminal activity; ethics and compliance concerns; physical threats; and information security breaches.

Governance structure

Humana’s governance structure reflects our commitment to serving the best interests of the company and its stockholders.

Board of Directors and Board Committees

We have 10 members on our Board of Directors, which includes President and CEO Bruce Broussard. Directors are elected annually by stockholders. The Chair and all other directors except Bruce Broussard meet independence standards established by the SEC and the NYSE. In addition, the Board must determine affirmatively that a director does not have any material relationship with Humana. All Board determinations regarding director independence are disclosed in our Annual Stockholders Meeting proxy statement. Our Corporate Governance Guidelines describe requirements and other details regarding the selection, qualification, compensation and evaluation of directors. As of December 31, 2015, Humana’s Board consists of nine men and one woman, all of whom are between 53 and 71 years old; two are members of an ethnic minority.

The basic responsibility of the Board is to exercise its business judgment to act in the best interests of Humana and its stockholders. The Board selects the senior management team, provides oversight of management, and ensures processes are in place for maintaining the integrity of the business, including ethics and compliance; risk management; relationships with stakeholders; and overall CSR performance. The Board has six scheduled meetings each year and relies on five board committees to support governance of the company: Audit; Executive; Investment; Nominating & Corporate Governance; and Organization & Compensation. Only directors who meet the SEC’s and the NYSE’s director independence standards may serve on the Audit Committee, the Nominating and Corporate Governance Committee, and the Organization and Compensation Committee. Every director must comply with Humana’s policy and procedures with respect to Related Person Transactions.

The Audit Committee meets regularly with Humana’s internal audit team and external auditors to oversee the company’s financial reporting processes. Semiannually, Humana’s internal audit team provides a report to the Audit Committee of material risks to the business. Internal auditors review and evaluate risks throughout the year, as identified by the company’s operational areas. We disclose material risks in our 10-K and 10-Q reports and have reported on material aspects (as defined by the Global Reporting Initiative) and their impacts in this report.

Learn more about Humana’s corporate governance efforts at Humana.com.